Hardin Memorial Hospital must pay more than $3.1 million to the federal government as part of an $8.9 million agreement involving claims of improper Medicare billing dating back to 2001.

Stephanie Collins, public affairs officer for the U.S. Attorney’s Office Western District of Kentucky, said the settlement does not concern patient care or diagnoses. No criminal allegations were made and no court proceedings are pending.

According to a statement released Aug. 11, Baptist Healthcare System has reached a settlement to pay $5,785,000 to “resolve claims that the company improperly billed Medicare.”

In addition to Hardin Memorial, the settlement involves claims of improper billing at Baptist Hospital East in Louisville, Western Baptist Hospital in Paducah, Baptist Hospital Northeast in La Grange, Central Baptist Hospital in Lexington and Baptist Regional Medical Center in Corbin, according to the U.S. Attorney’s Office.

Hardin Memorial Hospital agreed to pay the U.S. government $3,115,000 for the same allegations of improper payments, according to the statement.

Hardin County Judge-Executive Harry Berry said the county-owned hospital had been working through consultants and other means to resolve the matter, but an impasse arose because the hospital disagreed with the Department of Justice on billing codes assigned to certain medical services.

“We contend obviously at most it is billing errors,” Berry said. “We’re not sure they are errors, but that’s part of the settlement agreement, to get past the bickering and move on.”

Berry also echoed Collins that the settlement does not imply any instance of fraud or criminal activity.

“It’s just a disagreement on the complexity of billing codes,” he said.

According to the settlement agreement, the U.S. government says Baptist Healthcare and Hardin Memorial improperly billed Medicare by providing incorrect Diagnostic Related Group codes for several serious conditions, including respiratory infections and inflammations; pulmonary edema, or fluid accumulation in the lungs; respiratory failure; and septicemia, or blood infections.

The improper billing alleged by the federal government occurred between 2001 and 2006.

Collins said improper coding can result in Medicare providing more in reimbursement because the conditions are assumed to be more serious and require more care. However, she said the claims were settled out of court after the issues were called to the attention of Baptist Healthcare and Hardin Memorial so an agreement could be reached.

The settlement is not an admission of guilt by Baptist Healthcare or Hardin Memorial.

Berry said the $3.1 million agreed to in the settlement reflects only one-tenth of 1 percent of Medicare reimbursements from the period the claims were reviewed. It will not negatively affect the bottom line of the hospital’s current budget, Berry said, because the money had been set aside in previous years in preparation. However, he said it will affect some money that otherwise would have went into cash reserves had it not been set aside for the settlement.

Michelle Murphy, director of marketing and public relations for Hardin Memorial, said if the settlement was divided from 2001 to 2006, it would equate to about $500,000 per year.

Additionally, she said the hospital provides more than $20 million in unreimbursed care each year to patients unable to pay.

“While this is a significant amount of money, the repayment does not adversely impact Hardin Memorial Hospital’s operating budget, staff or the quality of patient care,” she said in a statement.

Murphy said Hardin Memorial is ready to move on and continue serving its patients.

“Medicare billing and coding rules are constantly changing and a challenge for every hospital across America,” Murphy said in a statement. “We are pleased to have resolved this matter and to move forward with our mission of providing high quality care to the residents of Hardin and surrounding counties.”

In addition to Hardin Memorial, the settlement involves claims of improper billing at Baptist Hospital East in Louisville, Western Baptist Hospital in Paducah, Baptist Hospital Northeast in La Grange, Central Baptist Hospital in Lexington and Baptist Regional Medical Center in Corbin, according to the U.S. Attorney’s Office.

The U.S. Attorney’s Office for the Western and Eastern Districts of Kentucky released the statement in conjunction with the U.S. Department of Justice and the Office of Inspector General of the Department of Health and Human Services.

“This settlement will return a significant amount of money back to the Medicare Trust Fund that should never have been paid out,” Derrick L. Jackson, special agent in charge of the Atlanta Region for the Office of Inspector General of the Department of Health and Human Services, said in a written statement.

“Protecting the Medicare trust fund remains a top priority for the Inspector General and U.S. Attorneys’ Offices,” he wrote.

Marty Finley writes for The News-Enterprise in Elizabethtown, a sister paper of The Oldham Era. Both newspapers are owned by Landmark Community Newspapers Inc., based in Shelbyville.